New Delhi Feb 7, 2010: A joint venture agreement between state-owned hydro power producers NHPC Ltd and Satluj Jal Vidyut Nigam Ltd (SJVN) and the government of Manipur to develop the Rs 8,138-crore Tipaimukh power project in the north-eastern state is likely to be signed by the end of the current financial year, ending March.

“The Manipur government has called a meeting of representatives from NHPC and SJVN on February 8 to discuss the terms of agreement of the 1,500-Mw project. The JV will be signed shortly after that. It will definitely happen by the end of this financial year,” said a senior official from SJVN.

In July last year, the power ministry had asked the three entities to form a joint venture (JV) for developing the project. NHPC would hold a majority 69 per cent stake in the project, while SJVN would take up another 26 per cent stake. The remaining 5 per cent would go in favour of the Manipur government.

The project was initially awarded to the state-owned utility North Eastern Electric Power Corporation Ltd (Neepco). The company had, however, expressed its inability to take up the project citing lack of budgetary support.

With the Tipaimukh project out of its shelf, Neepco’s capacity addition target came down to 3,000 Mw from 4,500 Mw earlier being planned by the end of March 2017. Neepco has a current installed power generation capacity of 1,130 Mw.

The stakeholders have already fast-tracked the work on implementing various pre-project activities. “The detailed project report (DPR) has already been prepared. Environmental clearances will be obtained now,” said the SJVN official.

SJVN is confident about raising equity for the restructured plant. The state-run utility will invest in the project from its internal resources.

The company, which claims it has a cash surplus of Rs 1,200 crore, is the next state-run power company in line after NHPC for getting listed through a public issue, likely to be announced in the next financial year. Of the free power available from the Tipaimukh project, 11 per cent would go to Manipur, while 1 per cent would be shared between Manipur and Mizoram since parts of the project will also be in Mizoram.

The remaining power will be sold to different states on a long-term basis through power purchase agreements. According to sources, the levelised tariff for sale of power from the project, which is around Rs 4 per unit, could go up by 40-50 paise due to the complex nature of the project.

The cost of the project is likely to be escalated by at least Rs 1,000 crore owing to additional investment required for security and transport infrastructure to be developed. The additional funding would come directly from the central government as grant. The Union home ministry has already approved an outlay of Rs 300 crore on the project’s security, and also okayed Rs 203 crore for the construction of a highway. The remaining funds would go into building flood control infrastructure.